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Haywood County and Waynesville look to stay ahead of cryptocurrency mining

Haywood County and Waynesville look to stay ahead of cryptocurrency mining

It’s novel, it’s trendy and it’s a great way to become fabulously wealthy — or lose everything you have — but the nuisances associated with the production of cryptocurrency are prompting local governments to regulate them before it’s too late. 

Cryptocurrency started off as a mathematical theory back in the mid-1980s, promising a decentralized, untraceable digital currency that, by its very nature, was considered un-hackable and resistant to restrictions issued by governments and traditional financial regulatory authorities.

Cryptographers, mathematicians and programmers helped to make it real when, on Jan. 9, 2009, Bitcoin was launched, in turn prompting the creation of hundreds if not thousands of similar currencies, called “coins” or “tokens.”

Creating the currency is called “mining” but doesn’t involve excavation, or holes in the ground.

Instead, powerful computers incessantly perform complex mathematical calculations verifying the chain of transactions that ensure the provenance of the coins. In return for the work performed by the computers, miners are rewarded with some fraction or multiple of a particular coin. The more work the computers perform, the better the chances of earning a reward.

Currently, cryptocurrency can be used just like money; however, it’s not widely accepted commercially and experiences volatile fluctuations in value that make budgeting difficult, if not impossible. That’s because coins are traded on a number of digital apps that function like exchanges and allow users to buy, sell or trade coins instantly, albeit with sometimes drastic swings in price.

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In April 2021, a single Bitcoin would have been enough to purchase a new, fully-loaded Chevy Silverado; two months later, that same Bitcoin would have only been enough for a used Toyota Prius.

Right now, cryptocurrency is seen less as a currency and more as an investment, albeit an exceptionally risky one.

Mining can be performed on cheap, commercially available desktops and laptops at home; however, mining at that scale is inefficient and hideously unprofitable when compared to the amount of energy it takes to keep a computer operating at such levels around the clock.

Scaling the process up with more computers and more efficient computers can help miners carve out profit, depending on the instant value of the coins they mine, but with that scale comes several major challenges — the amount of electricity needed, the amount of heat produced by the machines and the amount of noise produced outside the building by climate control systems designed to keep it all cool.

It’s like “ a small jet that never leaves,” Mike Lugiewicz told CNN this past January, about a cryptocurrency mining operation that set up shop near his Cherokee County home.

But by that point, it was too late for Cherokee County to attempt to regulate such establishments.

Haywood County Commissioner Tommy Long said that around then, he’d had conversations with Cal Stiles, chair of the Cherokee County Board of Commissioners, who told Long that another problem was the tremendous amount of electricity they consume.

“The one in downtown Murphy actually uses twice as much power as the whole town,” Long said during a presentation by the county’s development services coordinator earlier this year.

Long was also concerned that such operations don’t typically provide many local jobs.

On Nov. 6, Long and fellow commissioners approved changes to the county’s high-impact development ordinance originally passed in 2016.

The aim of the ordinance is to protect vulnerable populations, including those at assisted living facilities, childcare facilities, correctional institutions, hospitals, nursing or retirement homes and schools from nearby developments that deal in asphalt and chemicals or other explosives, along with landfills, traditional mines and quarries.

Now, data centers and cryptocurrency mining facilities can only locate on parcels under county jurisdiction where a 750-foot setback from property lines must be observed.

On. Nov. 14, Waynesville followed suit by adding two new categories to the table of permitted uses in the town’s land development standards, defining them and then severely restricting where the uses are permitted, or prohibiting them altogether.

The first category is for cryptocurrency mining facilities, defined in the table as, “a facility that exists for the purpose of operating computer equipment in order to mine or store cryptocurrencies or the data associated with mining or storing of cryptocurrencies.”

Specifically exempt from this definition are personal computers operated by individuals who use them to engage in cryptocurrency mining.

According to the table, cryptocurrency mining facilities are prohibited from locating in all town zoning categories.

The second category, for data center facilities, was created due to concerns voiced by Council members Anthony Sutton and Julia Freeman back on Oct. 10. As then construed, the town’s attempt to regulate cryptocurrency mining facilities could have led to unanticipated consequences by inadvertently prohibiting data centers.

“It sounds like they’re lumped together under what we’re being presented here tonight,” Freeman said.

Data centers are largely the same as cryptocurrency mining facilities, utilizing the same hardware but different software to perform different tasks, like sharing cloud-based applications, storing files or serving data to users across the globe. Many entities, like private businesses or the state courts, utilize some sort of data center as part of their ongoing operations.

Data centers incidental to entities operating under another permitted use are often smaller than full-fledged standalone crypto mines — which must work at scale to be profitable — and are sometimes just a small room inside a larger office building. Per Council’s final definition, such data centers would be exempt from the designation.

Standalone data centers, which “exist for the sole purpose of storing, processing or sharing data or applications,” are now permitted only in the town’s commercial-industrial zoning designation.

Haywood’s other municipalities are currently in different stages of considering the issue, or not considering the issue, as the case may be.

Clyde’s Town Administrator, Joy Garland, said there hadn’t yet been any official discussions about regulation there.

The Town of Canton hasn’t discussed the issue either, according to Mayor Zeb Smathers.

In Maggie Valley, Town Planner Sam Cullen said the planning board had discussed the issue and was waiting to see what the county might do. Now that the county has weighed in, it’s possible that Maggie’s board would enter tain further discussion on the issue.

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